Budget 2019: Startups rue lack of clarity on key issues

While admitting that there were also positives, entrepreneurs said it was still a lost opportunity.

BANGALURU: India’s startup ecosystem said it was disappointed by the lack of a solution to contentious issues plaguing the sector such as the angel tax. Entrepreneurs said overall sentiment across the sector remained fairly subdued especially as the industry is also grappling with new ecommerce FDI rules. A long-time demand of startups to do away with Section 56 of the I-T Act, the so-called angel-tax issue, had picked up steam last year after firms began receiving I-T notices.

“An ‘election-year budget’ that expectedly has something for everyone,” said Kiran Mazumdar-Shaw, CMD, Biocon. “It was, however, disappointing to see the absence of any additional allocation for healthcare or incentives for science and technology. For the startups, angel-tax holiday for 10 years was expected but it did not happen,” she said.

“While there are a number of issues that the industry has brought up, they have not done anything to fix it or encourage the sector,” said Rehan Yar Khan, managing partner at Orios Venture Partners. Entrepreneurs said they had little hope of the issues being resolved given that it was only an interim budget. But the government’s move to address topics such as incometax slabs and farmer payouts added to the impression that the problems of startups were not high on the list to solve. “They need to solve the problem once and for all and the industry was expecting something. It’s a disappointment,” said V Balakrishnan, chairman of Exfinity Ventures, who was of the view that the new guidelines for FDI in ecommerce focused solely on protecting a vote bank of small traders and did not benefit consumers.

While admitting that there were also positives, entrepreneurs said it was still a lost opportunity. “Budget lacked a few expected measures, such as higher tax exemptions for the middle class and small businesses and the abolition of angel tax. We do encourage creation of a level playing field for MSMEs and providing a 2% rebate on loans up to Rs 1 crore for MSMEs,” said Radhika Aggarwal, chief business officer at ShopClues.

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